2023 (6) TMI 26 - AT - Income Tax

Tribunal rules late filing fees under Income Tax Act not enforceable retroactively

The Tribunal ruled in favor of the assessee, holding that late filing fees under Section 234E of the Income Tax Act could not be enforced before ... Late fees levied u/s 234E - intimation issued U/s. 200A - whether TDS returns pertaining to the period prior to 01/06/2015, if filed after 01/06/2015 and processed after 01/06/2015 whether they attract the amended provisions of Finance Act, 2012 and the specific provision for levy of “fee” under section 234E of the Act which was inserted w.e.f 1/6/2015? - HELD THAT:- There is no dispute that the issues involved in these appeals are squarely covered in favour of the assessee by Fatheraj Singhvi vs. Union of India [2016 (9) TMI 964 - KARNATAKA HIGH COURT] wherein as held the impugned notices under Section 200A of the Act for computation and intimation for payment of fee under Section 234E as they relate to for the period of the tax deducted prior to 1.6.2015 are set aside. Thus, in the instant case since the period of default was before the said date i.e., 01/06/2015, there is no merit in charging late filing fee U/s. 234E of the Act. Accordingly the Ld. AO is directed to delete the fee levied U/s. 234E of the Act in the order passed U/s. 200A - Decided in favour of assessee. Issues Involved:1. Levy of late filing fee under Section 234E of the Income Tax Act, 1961.2. Applicability of Section 234E for defaults before 01/06/2015.3. Reasonable cause for delay in filing quarterly statements.Summary:Issue 1: Levy of Late Filing Fee Under Section 234EThe assessee contested the levy of late filing fees under Section 234E of the Income Tax Act, 1961, arguing that the enabling provision for computation of fee while processing TDS statements was inserted in Section 200A only w.e.f. 01/06/2015. Therefore, the charging section, i.e., Section 234E, cannot be enforced prior to this date. The Tribunal upheld this view, stating that the amended provision applies only to returns pertaining to the period after 01/06/2015. Consequently, the late fee levied for periods before this date was deleted.Issue 2: Applicability of Section 234E for Defaults Before 01/06/2015The Tribunal referenced judgments from various High Courts, including the Karnataka High Court in Fatheraj Singhvi vs. Union of India, Kerala High Court in United Metals vs. ITO (TDS), and the Pune Bench of the Tribunal in Medical Superintendent Rural Hospital, Nashik vs. DCIT, CPC (TDS). These judgments supported the view that Section 234E could not be applied retroactively to periods before 01/06/2015. The Tribunal concluded that the levy of late fees under Section 234E for defaults before 01/06/2015 was not valid.Issue 3: Reasonable Cause for Delay in Filing Quarterly StatementsThe Tribunal considered the arguments regarding the genuine and reasonable cause for the delay in filing the TDS statements. However, since the main issue was the applicability of Section 234E before 01/06/2015, the Tribunal's decision primarily focused on this aspect.Conclusion:For AYs 2014-15 and 2015-16, the Tribunal allowed the appeals, directing the deletion of the late fees levied under Section 234E for periods before 01/06/2015. For AYs 2016-17 and 2017-18, the Tribunal dismissed the appeals, upholding the levy of late fees as the defaults occurred after the insertion of the enabling provision in Section 200A.Pronouncement:The judgment was pronounced in the open court on 03rd April 2023.